RBC Capital upgrades Bunzl to ‘sector perform’

"After a period of deflation-linked underperformance, we raise our rating to SP to reflect, principally, a brighter revenue and margin outlook, confidence around M&A execution and a new capital allocation strategy which we think widens the investor audience," RBC said.

The bank said the price target increase reflects the value of future M&A.

RBC also said it was lifting its FY24 and FY25 earnings per share estimates by around 2% and 4%, respectively, to reflect stronger assumed margin progression, incremental M&A and around £450m of planned share buybacks.

"Though we believe BNZL will remain a 'sleep tight at night' stock for longer-term investors, we currently prefer DCC and RS1 in the B2B distribution sub-sector," it said.

At 1040 BST, the shares were up 1.6% at 3,516p.